What Is Car Depreciation and What Does It Mean for You?

Short Analysis from Well-Known Auto Repair Shop Specialists in Mt Pleasant, MI

Car depreciation can cause a new car to lose its value at an alarming rate. This, actually, is the decline in an automobile’s value over the course of its useful life. New-car buyers may dread this, but new cars lose between 15 and 20% of their value each year. Here are some additional new car depreciation numbers presented by our auto repair shop specialists:

  • As soon as you drive a new car off the parking lot its depreciation starts with as much as 11% of its value.
  • About 65% is the average depreciation after 5 years.

Let’s say that you have paid for a new automobile $25,000. Driving even one mile out of the auto store will lower its value to $22,220. After a year, the same car will be worth about $18,800. After another year, the price will drop to $15,950. One more year and you will be able to sell it for no more than $13,500. Four years later, this price will fall to $11,300. And on the fifth year, after you have bought ,it will cost no more than $9,300.

Many people believe that buying used cars will cost them more annual visits to an auto repair shop but that is not necessarily the case at all times. Here are a few benefits of buying used autos:

  • The majority of the savings are simply due to depreciation.
  • You will not suffer because you cannot recover the money for depreciation.
  • You will pay less for insurance, taxes, and monthly payments.
  • You can find recent models that are still under warranty, so you may not have to worry about the reliability of the used car you have bought.
  • Buying some old car models with solid reputation may be a better choice than a new model for which you have no information.

To learn more about depreciation, you can contact the auto repair shop Oil City Transmission in Mt Pleasant, MI. You can reach us with all your questions at (989) 775-6100!.